Latest budget debate centers on franchise fees

Published: Friday, May 10, 2013 at 06:39 PM.

As Okaloosa County faces more than $4 million in additional expenses for the coming budget year, officials are scrambling to find new sources of revenue.

In the past month, county commissioners have considered raising property taxes, the local gas tax and levying a local option sales tax.

Now the discussion has turned to franchise fees.

Under that plan, the county would charge the major local utility companies — Gulf Power, Choctawhatchee Electric Cooperative and Okaloosa Gas — a fee for the use of public rights of way.

Support for franchise fees is mixed among the commissioners.

“To me, it’s a shell game. … If we levy the franchise fee, it’s not going to be the company who pays for it,” Commissioner Wayne Harris said at the board’s meeting in Crestview earlier this week. “It’s going to be the rate users.”

Commissioner Kelly Windes agreed, saying he feared a franchise fee would “trickle down and be another tax.”

But Commissioner Dave Parisot said the board has no control over whether the utility passes on the charge to customers.

“That’s their call,” Parisot said during the meeting. “That’s not ours. What we’d be implementing with a franchise fee is a charge to the utility company for using our public rights of way, which they are currently not paying a penny for.”

Commissioners sent letters to the three utilities in late April to ask if they would agree to pay franchise fees.

Sheriff Larry Ashley also sent letters to the utilities to urge them to agree to the charges. He said franchise fees are the “most logical and equitable revenue enhancement option available” and “desperately needed to sustain many of the county’s most critical services.”

In the letter, Ashley said a 19 percent budget reduction since 2009 has challenged his agency’s ability to provide for the public’s safety. He said the reduction has been accompanied by a 14 percent increase in service calls, a 4.5 percent increase in population, a 26 percent rise in violent crime and a 3 percent rise in overall crime in the county.

“I believe this rise in crime is directly attributable and proportional to the continued reduction of our public safety funding,” Ashley said in the letter.

He also pointed out that Walton and Santa Rosa counties collect franchise fees, and asked the utilities to “afford our citizens the same benefits you have helped provide the citizens of our neighboring counties.”

But Okaloosa Gas, CHELCO and Gulf Power have shown little support for franchise fees. They say any franchise fee assessed by the county likely would get passed on to their customers.

“A franchise tax would cause customers to see higher bill amounts — higher bills that don’t have anything to do with their electric service from Gulf Power,” Gulf Power spokesman Jeff Rogers said.

Rogers said Gulf Power opposes any fee that doesn’t contribute to the quality of the electrical service it provides.

“It also puts Gulf Power in the position of being the tax collector, and it can impact a customer’s ability to pay their electricity bill,” Rogers added.

Eddie Springle, marketing director at Okaloosa Gas, said the company “is in an evaluation process concerning franchise fees” and plans to release a statement in the next two weeks.

Springle said a franchise fee “could impact the rates of the customers” but that it’s too early to know the extent.

CHELCO CEO Steve Rhodes said he understands the “tough fiscal climate facing local governments” but the cooperative must serve the interests of its members.

“CHELCO members are also owners of the not-for-profit cooperative, which means they would end up paying the franchise fee,” Rhodes said. “By levying a right of way fee, Okaloosa County commissioners would be imposing a de facto tax on thousands of the cooperative’s members.

“Essentially, the county needs to ask our members what they think about the utility fee,” he said. “It would be a pass-through to them.”

Commissioners are expected to discuss franchise fees and a proposed gas tax hike at its May 21 meeting in Fort Walton Beach.

As Okaloosa County faces more than $4 million in additional expenses for the coming budget year, officials are scrambling to find new sources of revenue.

In the past month, county commissioners have considered raising property taxes, the local gas tax and levying a local option sales tax.

Now the discussion has turned to franchise fees.

Under that plan, the county would charge the major local utility companies — Gulf Power, Choctawhatchee Electric Cooperative and Okaloosa Gas — a fee for the use of public rights of way.

Support for franchise fees is mixed among the commissioners.

“To me, it’s a shell game. … If we levy the franchise fee, it’s not going to be the company who pays for it,” Commissioner Wayne Harris said at the board’s meeting in Crestview earlier this week. “It’s going to be the rate users.”

Commissioner Kelly Windes agreed, saying he feared a franchise fee would “trickle down and be another tax.”

But Commissioner Dave Parisot said the board has no control over whether the utility passes on the charge to customers.

“That’s their call,” Parisot said during the meeting. “That’s not ours. What we’d be implementing with a franchise fee is a charge to the utility company for using our public rights of way, which they are currently not paying a penny for.”

Commissioners sent letters to the three utilities in late April to ask if they would agree to pay franchise fees.

Sheriff Larry Ashley also sent letters to the utilities to urge them to agree to the charges. He said franchise fees are the “most logical and equitable revenue enhancement option available” and “desperately needed to sustain many of the county’s most critical services.”

In the letter, Ashley said a 19 percent budget reduction since 2009 has challenged his agency’s ability to provide for the public’s safety. He said the reduction has been accompanied by a 14 percent increase in service calls, a 4.5 percent increase in population, a 26 percent rise in violent crime and a 3 percent rise in overall crime in the county.

“I believe this rise in crime is directly attributable and proportional to the continued reduction of our public safety funding,” Ashley said in the letter.

He also pointed out that Walton and Santa Rosa counties collect franchise fees, and asked the utilities to “afford our citizens the same benefits you have helped provide the citizens of our neighboring counties.”

But Okaloosa Gas, CHELCO and Gulf Power have shown little support for franchise fees. They say any franchise fee assessed by the county likely would get passed on to their customers.

“A franchise tax would cause customers to see higher bill amounts — higher bills that don’t have anything to do with their electric service from Gulf Power,” Gulf Power spokesman Jeff Rogers said.

Rogers said Gulf Power opposes any fee that doesn’t contribute to the quality of the electrical service it provides.

“It also puts Gulf Power in the position of being the tax collector, and it can impact a customer’s ability to pay their electricity bill,” Rogers added.

Eddie Springle, marketing director at Okaloosa Gas, said the company “is in an evaluation process concerning franchise fees” and plans to release a statement in the next two weeks.

Springle said a franchise fee “could impact the rates of the customers” but that it’s too early to know the extent.

CHELCO CEO Steve Rhodes said he understands the “tough fiscal climate facing local governments” but the cooperative must serve the interests of its members.

“CHELCO members are also owners of the not-for-profit cooperative, which means they would end up paying the franchise fee,” Rhodes said. “By levying a right of way fee, Okaloosa County commissioners would be imposing a de facto tax on thousands of the cooperative’s members.

“Essentially, the county needs to ask our members what they think about the utility fee,” he said. “It would be a pass-through to them.”

Commissioners are expected to discuss franchise fees and a proposed gas tax hike at its May 21 meeting in Fort Walton Beach.